A windfall tax on oil companies, demanded by the opposition parties, would deliver a short-term gain for the exchequer – which could be passed on to hard pressed tax-payers and consumers.
It would however, be an irresponsible expedient at the expense of the long-term interests of the very same tax-payers and consumers.
We live and work in an international economy where we compete for investment to generate jobs, productivity and -so proceeding- greater prosperity. The key to this competitive process is to present ourselves as a stable, predictable and business-friendly jurisdiction. Few things could be more damaging to that reputation than arbitrary taxes imposed on enterprises because the markets have delivered them unexpectedly high profits.
The proper course for a country that wants to become and to remain prosperous, is to design a tax system that incentivises the reinvestment of profits in to more productive enterprises.
Advocates of a windfall, often pray in aid the windfall tax imposed on the Banks in the early years of Lady Thatcher’s government. Though I’ve worshipped at her shrine too, she wasn’t perfect and that tax was one of her mistakes.
Sir Desmond Swayne TD
